[WSBARP] Life Estate Deed

[Marvin Benson]

One concern with a life estate is the possibility of a medicaid recovery
lien against the value of the life estate.

Marvin Benson


On Fri, Jan 11, 2019 at 11:04 AM Eric Nelsen <Eric at sayrelawoffices.com>
wrote:

> I'm interested in the background behind his ownership, if it's titled in
> his parents' name. If that's literally true--as in, he paid all the money
> for it and the parents have never contributed a dime to anything, and hold
> the title for reasons unrelated to them having a financial interest--then
> the parents are holding the property merely as nominees (agents with
> undisclosed principal). See also WAC 458-61A-214
> <https://apps.leg.wa.gov/wac/default.aspx?cite=458-61A-214>.
>
>
>
> If that's the case, then he owns the property now, and there is no need to
> have any kind of change in title on record. It might actually confuse
> things to have the parents convey interests, and could have tax
> consequences.
>
>
>
> Instead, he and his parents could sign an agreement confirming that the
> property in fact belongs to PC already and title is held by the parents
> nominally only, without any financial interest. Parents could include in
> the agreement a directive to any future Personal Representative of their
> Estate that the property should be immediately conveyed to PC on their
> death, without consideration. Attach and/or keep with the agreement all the
> documentation clearly tracing PC's funds into the purchase, so there is a
> solid evidentiary record proving that the parents never had a financial
> interest.
>
>
>
> If the above scenario doesn't fit here, and in fact the parents do have
> some kind of financial interest, it gets trickier and I would question the
> purpose of the deed change. To get the step-up on tax basis on death it's
> generally better to leave the parents' interest alone during life and let
> PC actually inherit it. That could be done with a TOD deed plus a side
> contract agreeing that the TOD deed shall not be revoked without PC's
> consent, and agreeing that a constructive trust would be imposed in the
> event of a breach by parents. Other protections could be added too, but
> that would be my starting point, I think.
>
>
>
> There is always significant tension between opposing goals of "protect my
> interest in the property" and "keep my name off the property." And what to
> do varies significantly, I think, depending on the reasons for the opposing
> goals, and the true financial history regarding interests in the property.
>
>
>
> Sincerely,
>
>
>
> Eric
>
>
>
> Eric C. Nelsen
>
> SAYRE LAW OFFICES, PLLC
>
> 1417 31st Ave South
>
> Seattle WA  98144-3909
>
> phone 206-625-0092
>
> fax 206-625-9040
>
>
>
> *From:* wsbarp-bounces at lists.wsbarppt.com [mailto:
> wsbarp-bounces at lists.wsbarppt.com] *On Behalf Of *nestor at pplsweb.com
> *Sent:* Friday, January 11, 2019 9:11 AM
> *To:* 'WSBA Real Property Listserv'
> *Subject:* [WSBARP] Life Estate Deed
>
>
>
> PC’s owns property which he put in father and mothers name. He is not sure
> he wants to be put in title, just yet, but wants to make sure he gets the
> property on death. He asked me about a TOD deed, but that can always be
> canceled. I thought of 2 scenarios that would be better. (1) F &M convey to
> F&M and PC as joint tenants with the right of survivorship. There will be
> excise tax on conveyance of partial interest since there is an outstanding
> DT; or (2) F&M to F&M a life estate with remainder to PC.
>
>
>
> I believe that option 2 will be better, since there is no transfer of a
> present interest (no excise tax) and parents cannot terminate remainder
> interest.
>
>
>
> I am curious as to which way, my learned colleagues would go or show me
> the error of my ways.
>
>
>
> Happy Friday!
>
>
>
>
>
> Nestor Gorfinkel, Attorney at Law
>
> Licensed in Washington & Florida
>
> Florida Civil-Law (International) Notary
>
>
>
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